Wednesday, 30 August 2017

On Sunday Sept 3rd
the Ballyhea Says No campaign takes the road once again, our focus now on the
Promissory Notes of 2009/10 when €31bn was gifted by our Central Bank to two
insolvent institutions, Anglo Irish Bank (€25.5bn) and INBS (€5.5bn).

The
quid quo pro for the creation of those billions,
which all three of the Central Bank, the government and the ECB knew would never be repaid by either Anglo or INBS (both of
which were insolvent, is
that the Central Bank of Ireland must take that €31bn back out of circulation.

I'm asking people now to
please, please, read the following few paragraphs, then read them again if the
enormity of what’s happening doesn’t sink in the first time. Because it’s
critical that you understand that as part of the Anglo Irish Bank bailout
legacy, our Central Bank is right now destroying borrowed billions, and doing
so at an accelerating rate.

That’s
€9.5billion destroyed by the Central Bank of Ireland in the last three years, €3billion in each of 2011 and 2012, with
another €15.5bn still to go.

Just
pause and think about that for a moment.

A
billion euro is one thousand million euro.

Since 2014, at a time when our
country has been crying out for investment in housing, in health, in
infrastructure for water and transport, our Central Bank has destroyed nine thousand million euro, every cent of which was borrowed, every
cent of which will have to repaid at some stage in the future, on every cent of
which we are now paying interest.

This is political choice. Rather than challenge the ECB on the illegitimacy, the illegality, the immorality of this, successive government choose to borrow billions for destruction, debt piled on legacy debt for future generations, when those billions could be used so constructively.

The above is not being reported by any Irish media. What is being reported is partial truth in such as the Irish Times, which in fact presents all this almost as a 'good news' story - we're 'cancelling debt' at an unprecedented rate, no mention of the fact that we're destroying billions every year.

THE CURRENT SITUATION

Over
the past several years the NTMA has been building up something of a war chest –
prudent, given that borrowing costs are now so low. However, rather than using
those billions to invest in all those badly needed services, they’ve been
redeeming the Promissory Note bonds from the Central Bank of Ireland, and
they’ve been doing it a rate far faster than the new schedule calls for. The
NTMA gives the Central Bank of Ireland the borrowed billions, the Central Bank
of Ireland then destroys them, the ECB is satisfied. That is worth repeating
and even stressing – the Central Bank of Ireland is destroying
those borrowed billions.

Why
is all this ignored by our national media? Where is the outrage, the criticism?

JUSTICE FOR IRELAND

The
Ballyhea Says No campaign isn’t about finding fault for this entire Promissory
Notes debacle, it’s about finding justice for Ireland.

When
the banking crisis hit the eurozone the fledgling currency was ill-equipped to
deal with the fall-out, not a single support structure in place. Ireland shares
responsibility with all the others in the eurozone for those design failures –
we were party to it. But the eurozone shares a responsibility with Ireland for
the cost of that failure.

In
the absence of a Banking Resolution Mechanism (now in place), the Promissory
Notes were an emergency measure – almost a panic measure – to relieve a
situation that threatened to bring down the entire eurozone banking system. The
fear was that if one bank failed it would lead to a domino effect. In itself
this was fair enough; that Ireland is now forced to carry the full Promissory
Note cost of that euro design failure is not.

CALL TO ARMS!

And so, we’re back,
unfinished business, on the road in Ballyhea on Sunday Sept 3rd at
10.30am, and on the first Sunday of every month thereafter until we finally get
bank-debt justice for Ireland. And because this is an injustice to us all, we’re
looking for support, across-the-board support, from all political parties and
Independents, from all media, from all of Ireland.

We will also have a new slogan - Ballyhea Says Know!

FOR THOSE WHO LIKE
DETAIL – THE PROMISSORY NOTES NUTS AND BOLTS

The
way it happens is as follows:

Under the original schedule of destruction for the €31bn, the
government had to destroy €3.1bn every year (March 31st the
deadline). It
happened in 2011 shortly after the new Fine Gael/Labour coalition government
had been elected, under the radar, but of course it was totally unsustainable.

In
2012 (€3.1bn) and 2013 (€25bn), under instructions from then Finance Minister
Michael Noonan, the NTMA (National Treasury Management Agency, the institution
charged with borrowing on behalf of the state) issued sovereign bonds to buy out
the remaining Promissory Notes, all of which were immediately acquired by our
Central Bank.

So
far, this was just a paper exercise. One state institution – NTMA – issued
bonds which were held by another state institution, the Central Bank of
Ireland. The NTMA was paying interest on those bonds to the Central Bank of
Ireland which in turn was returned to the state exchequer – a circular
arrangement, no cost to the state.

As
long as the CBI held those bonds this would be the case but of course this
wouldn’t satisfy the ECB, who wanted to see that €31bn taken out of
circulation. Alongwith the creation of those new Promissory
Note bonds, a new schedule of destruction
was also created. Rather than €3.1bn a year, the Central Bank of Ireland would
sell those bonds at an initial rate of €500m a year for eight years, then
gradually increase the rate until the entire €31bn was gone.

4)Everyone
involved – the Irish Central Bank, the Government and most critical of all, the
ECB
– knew all this, knew those P Notes were
literally papering over not just cracks but a fatal hole below the waterline of
the two banks involved; however, in the absence of any formal structures to
deal with troubled banks within the new euro currency area (fatal flaw in its
design), needs must – it was a crisis situation;

5)The banks went under, as was inevitable;

6)The ECB insists that the €31bn
'created' as a result of the P Notes must be taken back out of circulation –
Ireland forced to pay for the euro design flaw;

7)Rather than challenge the ECB on the
legitimacy of all this, in 2013 new Finance Minister Michael Noonan transposed
those bonds to sovereign debt, created a schedule of destruction;

8)Chunk by chunk, €500million by
€500million, that schedule is now being followed (accelerated even) by the
Central Bank;

9)The process is this:

i.Using previously borrowed money, our
National Treasury Management Agency (NTMA) buys one of the P Note bonds issued
under the Noonan 2013 ‘deal’ from the Central Bank (usually a tranche of
€500million);

ii.The Central Bank destroys that €500million
(probably just the push of a computer button), declares that element of the €31bn
P Note debt 'cancelled';

iii.The €31bn is reduced by that amount – we still
have over €20bn remaining to be thus destroyed;

iv.The money that was used by the NTMA to buy
that P Note bond will eventually have to be repaid and in the meantime we pay
interest on it;

v.The
critical thing to know, however, is that the Irish people get absolutely no
benefit from that €500m.